Athletic Club Bilbao eliminated Manchester United. Man U is in a downhill spiral.
This also shows how incredible Marcelo Bielsa is as a coach.
I don't really know about "downward spiral". They're certainly not as good as they were last season (or the season before that), but it's consequences you have to take when you're in a renewal-phase. Several young players getting some time, and while Jones and De Gea (for example) will most likely be among the best in a few years, being as young as they are now, it is expected that they will have good and bad games.
Still, while Man U have been disappointing in Europe and in the cups, they're still top of the table in Premier League, and I have no doubt at all that they will win it. The team still looks the strongest and has the "winners" in the team. What does Man City have? A good squad, but how many of the players has actually won something? Add to that the fact that City has a much tougher schedule with 5 (I think) games against other top teams left, meanwhile Man U only has City. (unless I missed something) So yeah, they're still favorites and will most likely win PL.
Honestly I think a lot of the talks about a team being in a "crisis" and similar situations are normally far fetched. Every team encounters a weaker season, and if this is a bad season for Man U, and they still win Premier League, then it's not a bad season really?
I do hope for some transfers during the summer though, Man U has tried to play more attractive this season, and that is something I approve of. I think both Barcelona and Real has showed the other teams that playing nice is the way to go (which Real has been doing this season), so hopefully Ferguson will learn from that. Would love to see Man U sign Hazard, but he would cost 30-35€ or something, so it's not the kind of money anyone would just pay up.
Still, I think Bilbao deserved to go through. As I mentioned last game, Llorente, Muniain, Herrera and Martinez are all very interesting players. The sad part for Bilbao is that Barca or Real will probably snatch Muniain eventually.